Weak & Getting Weaker – Precious Metal 3rd June

Bullion Daily

The following information is a guideline (trading plan) and should not be treated as financial advice. Not advice but banter and active in sharing trade ideas via twitter @sugardaddyFED

Gold has not benefited with a run higher after a sell-off in the US dollar index that seems to support a rally in other commodities currency. Taking out the psychological level of 1200 proves difficult, let alone closing above it. Short time frame seems to suggest a bear flag formation and if we are to use AB (1207 to 1185) – CD (1185 to 1163) then gold has rooms to fall further to find support at 1163 levels if it break and close below 1180 and 1178.

This means it will break out of the ascending triangle pattern and 1163 levels should find decent support given that it will coincide with its long term rising trend line (monthly chart). Failure at 1163 then gold is in a whole lot of trouble with 1155, 1145 and 1130 as next support. Should that murmur of Head & Shoulder play out then a break from neckline has a price target of 1133 which is worth taking into account. One thing for sure, the lack of interest in this market and with sellers dominating – then a move lower is the play of the week. No longer is gold price dependant on US dollar but probably on the next set of US economic data and other geo-political issues.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance Levels:

  • Previous high at 1232.31
  • DMAs 200 at 1212 / 100 at 1210 / 50 at 1198 and 20 at 1199
  • Previous high at 1204

Daily Support Levels:

  • Previous low at 1180.20
  • May low 1170.30

It is worth noting that a rising Bollinger Band in Silver price action seems to suggest another leg down is coming. See the chart as we are highlighting that should price hit the top of the BB, silver retraced heavily and this time might not be so different. Should this play out, we have 15.77 as the potential price target.

The RSI also seems to suggest that there are more rooms lower from here on and the white metal is not oversold yet.  We will cover any remaining long and will look to enter short with a stop at 16.90 levels.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance Levels:

  • Previous daily high at 17.75
  • Psychological level at 18.00
  • Downtrend line that coincide with 18.00
  • 200 ma at 16.86, 100 ma at 16.67, 20 ma at 16.86
  • Upper BB line at 17.64

Daily Support Levels:

  • DMA levels 50 at 16.60
  • Previous low at 16.53
  • Fib retracement level 38.2% at 16.40
  • Lower BB at 16.02 (watch BB rising and Converging)

As mentioned in our previous commentary, previous low at 1107.8 is not the low and we now have 1100.1 registered. Weakness in Platinum is by far the worse out of all the metals and the damage done on the chart is suggesting more weakness to come forth unless we see a strong green close. Only a break above the downtrend line will give buyers some relieve, otherwise we have 1067 as price target.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance levels:

  • Previous daily high at 1177.1
  • 100 dma at 1168 / 50 at 1144 and 20 at 1136

Daily Support levels:

  • Previous low at 1100.1
  • Lower BB line at 1097
  • March low at 1086.5

Palladium remains in selling mode and we may well see some sort of relieve pullback today or tomorrow as it reach some minor support. It maintains the course of lower high and lower low is now registered coming to that block of support zone highlighted in blue. Only a break above 801 will give the bulls the confidence to test higher prices. Current price action is dominated by sellers so a pullback higher is a sell. Look to add short at 775 to 783 key levels to target a retest of 752 levels.

Below are key levels that we will continue to monitor and this will change depending on price action.

Daily Resistance levels:

  • Previous daily high at 801.6 and 797.6
  • 200 dma at 791 / 100 at 778 / 20 at 782
  • Downtrend line (see the shaded brown zone)

Daily Support levels:

  • DMAs 50 at 772
  • Fib retracement levels 38.2% at 771.5 / 50% at 762.3

Economic Calendar & Fundamental Analysis

  AUD GDP (QoQ) (Q1)

–          Stronger than expected Aus/Usd rally

–          Commodities rallied but gave back despite weak USD

0.9% 0.7% 0.5%
  AUD GDP (YoY) (Q1) 2.3% 2.1% 2.5%
  CNY HSBC Services PMI (May)

– Risk on with better data

53.5 53.3 52.9
  GBP Nationwide HPI (YoY) (May) 4.6% 4.7% 5.2%
  GBP Nationwide HPI (MoM) (May) 0.3% 0.3% 1.0%
  EUR Spanish Services PMI (May) 58.4 59.3 60.3
  EUR Italian Services PMI (May)   52.7 53.1
  EUR French Services PMI (May)   51.6 51.6
  EUR German Services PMI (May)   52.9 52.9
  EUR Markit Composite PMI (May)   53.4 53.4
  EUR Services PMI (May)   53.3 53.3
  GBP Services PMI (May)   59.2 59.5
  EUR Retail Sales (MoM) (Apr)   0.7% -0.8%
  EUR Unemployment Rate (Apr)   11.2% 11.3%
  EUR Interest Rate Decision (Jun)

–          likelihood to remain the same here

–          Given that Bund is down will Euro rally continue?

  0.05% 0.05%
  USD ADP Nonfarm Employment Change (May)

–          Watch US dollar index for better data

–          USD index trying to find support

  200K 169K
  USD Trade Balance (Apr)   -44.00B -51.40B
  CAD Trade Balance (Apr)   -2.10B -3.02B
  EUR ECB Press Conference

–          All eyes on Draghi and Grexit

–          Will Draghi talk down the current Euro strength?

 
  USD Markit Composite PMI (May)   57.0 56.1
  USD Services PMI (May)   56.5 56.4
  USD ISM Non-Manufacturing Employment (May)   56.7
  USD ISM Non-Manufacturing PMI (May)

–          Key data again that will affect US dollar index

  57.0 57.8
  USD Crude Oil Inventories   -1.700M -2.802M
  USD Beige Book  
  BRL Interest Rate Decision   13.75% 13.25%
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